USD/CHF bears flirting with multi-day lows, around 0.9700 mark ahead of NFP
|- USD/CHF extended the overnight rejection slide from 200-day SMA resistance.
- Speculations over negative Fed rates undermined the USD and exerted pressure.
- Bulls seemed unimpressed by the risk-on mood as the focus now shifts to NFP.
The USD/CHF pair dropped to three-day lows in the last hour, with bears now waiting for some follow-through selling below the 0.9700 round-figure mark.
Having once again faced rejection near the very important 200-day SMA, the pair witnessed an intraday turnaround on Thursday and snapped three consecutive days of losing streak. The pullback extended for the second consecutive session on Friday and was sponsored by the prevalent US dollar selling bias.
The USD remained depressed through the early European session on Friday amid speculations that the Fed might push rates below zero. Investors argued that worse-than-anticipated economic downturn might force the US central bank to become more experimental in order to deal with the coronavirus crisis.
Meanwhile, the upbeat market mood, which tends to undermine the Swiss franc's safe-haven demand, did little to lend any support or stall the ongoing corrective slide. Against the backdrop of the latest optimism over the re-opening of economies in some parts of the world, the global risk sentiment got an additional boost from easing tensions between China and the United States.
Tops US and Chinese trade representatives said that the Phase 1 deal remained on track despite a spat over the origin of the coronavirus. It is worth reporting that the US President Donald Trump has threatened to terminate the trade deal and impose fresh tariffs on Chinese goods in retaliation to its cover-up and mishandling of the virus outbreak at the early stage.
With bulls shrugging off the risk-on mood, it will now be interesting to see if the pair is able to find any support at lower levels or the downfall confirms the formation of a bearish multi-tops pattern on the daily chart.
Moving ahead, market participants now look forward to Friday's release of the closely watched US monthly employment details. The NFP report is expected to show that the US economy shed a record 22 million jobs in April and the unemployment rate spiked to 14%. The data will influence the USD price dynamics and provide some meaningful impetus on the last day of the week.
Technical levels to watch
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